For consumers, technology has become a chief constituent in managing day-to-day finances. PwC’s Global Fintech Survey 2017 identified activities that incumbent financial services providers believe their customers were already conducting with FinTech companies. 84% of incumbents mentioned that their customers were making payments with FinTech companies, 68% were conducting fund transfers, and 60% said their clients were using FinTech for their personal finances.

We believe that radical transformation is on the cards in the world of finance. However, the future will revolve around openness, collaboration, automation and investment between the traditional financial institutions and fintechcompanies. Three developments that we expect to see in the years ahead are listed below.

Winning Collaboration between Financial Institutions and FinTech:

FinTech companies and banks are now building ties across the sector as they can anticipate benefits involved with successful collaboration. Fintech firms require capital and entrée into the customer base. Partnering with a large incumbent who will pitch them to their client base appears as a smart growth hack for fintech firms. Banks, on the other hand, struggle to adapt to innovation in order to maintain the standard demanded by the clients and to continue delivering a quality service. Collaboration with a nimble startup can fix this.

Steve Davies, PwC's EMEA fintech leader, says that partnerships help large corporates transform their ways of working; helping set them up for a nimble future. Davies further adds to the statement saying "Fintech collaboration, and innovation more widely, is not about jumping on the latest bandwagon — it’s about finding the best, most efficient way to deliver your business strategy and ultimately better serve your customers.”

Big data is giving a make-over to financial services landscape and data science is fueling up the fintech revolution. By integrating data science and predictive modeling with financial decision-making, fintech companies can now determine creditworthiness, illicit activities, and market trends more precisely. This may also lead to companies delivering a higher quality service to consumers, helping them make much smarter business decisions. As this fintech improves, the early adopters in the financial services market will have a major advantage over their slower-to-adapt competitors.

For instance, Fintech pioneer Kabbage, has transformed the personal loans business through data science and predictive analytics. They collect approximately 15,000 data points for each applicant, including transaction history, social network, studies and much more to create a 360 degree view of their prospective clients. Another women-led startup Tala uses data science technology for micro-loans via smartphones. The technology aggregates more than 10,000 data points on each customer's phone, from financial transactions to daily movement via GPS. It then builds a customized credit score based on these habits and offers loans to those who qualify.

A Need to Prioritize Integration and Connectivity:

Better connectivity will be the answer to longevity. Embracing a more connected way of doing business increases the likelihood for businesses to be around for almost a decade and beyond. Making sure each part of the company is connected, whether it is through data, process, or the people themselves, will allow for better decision-making and the ability to stay nimble in a time when financial laws and regulations change rapidly.

Traditional businesses often compartmentalize their operations into departments, and in many cases, those departments can fail to communicate, leading to critical oversights. When everything is connected a better flow of information is possible, meaning fintech companies can be much more agile than their competitors. This can really pay off when you’re competing against multi-national financial institutions with more resources.

What do you think about the developments expected from fintech in the coming year? Let us know in the comments below.

SSI has an extensive experience in the Financial Technology space working with partners ranging from established solution providers to startups in the Trading, Investment and Analysis space. Explore real-world fintech success stories on our website. Get a FREE quote for your next project by sending us an email at sales@ssidecisions.com.

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